Prologis to acquire Liberty Property for $12.6B
Prologis (PLD) and Liberty Property Trust (LPT) announced that the two companies have entered into a definitive merger agreement by which Prologis will acquire Liberty in an all-stock transaction, valued at approximately $12.6B, including the assumption of debt.
The board of Prologis and the board of trustees of Liberty have each unanimously approved the transaction.
Warehouses and logistics facilities — Liberty’s specialty — have become a hot part of the real estate market as more shopping moves online and demand for the space increases.
The acquisition gives Prologis a portfolio of 107 million square feet of logistics properties that’s owned or managed, as well as buildings under construction and land for future development. It also includes 4.9 million square feet of office space.
Prologis plans to dispose of approximately $3.5B of assets on a pro rata share basis. This includes $2.8B of non-strategic logistics properties and $700M of office properties.
This transaction is anticipated to create immediate cost synergies of approximately $120M from corporate general and administrative cost savings, operating leverage, lower interest expense and lease adjustments.
Initially, this transaction is expected to increase annual core funds from operations per share by 10c-12c. Upon stabilization of the acquired development assets, completion of the planned non-strategic asset sales and redeployment of the related proceeds, annual stabilized core FFO per share is forecasted to increase by an additional 4c per share for a total of 14c-16c.
Further, there are future synergies with the potential to generate approximately $60M in annual savings, including $10M from revenue synergies and $50M from incremental development value creation.
“Liberty’s logistics assets are highly complementary to our U.S. portfolio, and this acquisition increases our holdings and growth potential in several key markets,” Prologis Chairman and Chief Executive Hamid R. Moghadam said in the statement.
Under the terms of the agreement, Liberty shareholders will receive 0.675x of a Prologis share for each Liberty share they own.
The transaction, which is currently expected to close in Q1 of 2020, is subject to the approval of Liberty shareholders and other customary closing conditions.
Liberty shares have risen 21% this year, compared with the 55% jump in Prologis shares.
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